Deep despair comes when we realize what sorry sinners we are. Katy realizes she has a wayward nature and even though her soul craves the highest happiness she as a sinner has no power to fill that need.
The only way to fill the pit of despair is to realize that God knows exactly who I am, better than I do, and He loves me. Always has loved me and always will love me. Yes, He is holy, so as a sinner I cannot be in His presence. This is precisely why He came to earth and died for my sins. He paid with His holy, sinless life so I could be in His presence. This is His great love for me. This love is what continues to work in my life sanctifying me.